12 November 2009

Systematic vs Systemic

Would you be surprised if I told you that AMD was a high risk stock? And that the INTC settlement did wonders for the risky portfolio and has nothing to do with the systematic risk we attempt to model here? Maybe you don't care about systematic risk. It's not the same as systemic risk although it's easy to get them mixed up because sometimes systemic risk becomes systematic. By the looks to the way we are recovering from the Lehman crash of last year it appears that systemic risk will become a systematic risk (like interest rates, GDP growth, default risk, etc). If the market anticipates that another systemic shock is highly possible it will continue to treat some stocks from that vector and that vector alone.

BTW it still a bit bullish out there.

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